To rebuild trust with the people of Somalia and the international community, Somali leaders must begin a serious dialogue to heal their divisions and end the controversy over the relocation of the fledgling government and its institutions from Kenya to Somalia, United Nations Secretary-General Kofi Annan says in a new report.

"It is of utmost importance that the Transitional Federal Government and transitional federal institutions relocate to Somalia," Mr. Annan says in his latest report to the Security Council on situation in the Horn of Africa nation, which has had no functional central authority for 14 years following the collapse in 1991 of the government of Muhammad Siad Barre.

He notes that although the interim government was formed in Nairobi over eight months ago, deep splits between President Abdullahi Yusuf Ahmed and Parliament speaker Sharif Hassan Sheikh Adan over its location within the country have stalled a move to either to the Somali capital Mogadishu, or nearby Jawhar.

"There are serious challenges linked to the relocation, including security, the choice of capital city and lack of infrastructure and resources," says Mr. Annan. "However it is clear that the Government's relocation plan has become fraught with controversy and opposition, which could assume further divisions along clan and regional lines."

Calling for "serious dialogue" between the Somali factions to end this controversy, the Secretary-General welcomes the efforts of the leaders in Mogadishu to restore stability there. He also urges the international community to help in providing the necessary technical and material support that would improve the quality of those efforts.

"However, those efforts must become national in order to give confidence to all Somalis," he said, reiterating his appeal to the Transitional Government and Parliament, as a matter of priority to seek an agreement from all faction and militia leaders to cease hostilities and enter into immediate negotiations for a comprehensive ceasefire. "The United Nations is ready to support negotiations for such an agreement, in cooperation with other partners," he adds.

Mr. Annan notes that the second controversial issue facing Somalia is the inclusion of troops from the frontline States (Djibouti, Ethiopia, Kenya) in a future African Union/Inter-governmental Authority on Development (IGAD) peace support mission requested by President Yusuf. Once again, a large number of members of Parliament, cabinet ministers and other leaders oppose the deployment of troops from those countries.

The fact that the deployment of any foreign military force in Somalia will require an exemption form the Security Council arms embargo poses a challenge for the international community and the UN in particular, says Mr. Annan. A recent report from the Council's Monitoring Group made it clear that weapons and explosives still flowed into the country.

"The enforcement of the arms embargo, with improved monitoring capacity and the establishment of enforcement measures, would considerably enhance security in Somalia," Mr. Annan says.